1)
If the price falls from point A to point B, total revenue
a.increases, and demand is price elastic.
b.decreases, and demand is price elastic.
c.increases, and demand is price inelastic.
d.decreases, and demand is price inelastic.
2) Suppose a tax is imposed on bananas. In which of the following cases will the tax
cause the equilibrium quantity of bananas to shrink by the largest amount?
a.The response of buyers to a change in the price of bananas is strong, and the response
of sellers to a change in the price of bananas is weak.
b.The response of sellers to a change in the price of bananas is strong, and the response
of buyers to a change in the price of bananas is weak.
c.The response of buyers and sellers to a change in the price of bananas is strong.
d.The response of buyers and sellers to a change in the price of bananas is weak.
3) In general, the higher a person’s education level,
a.the higher the person’s earnings.
b.the more physically attractive the person is likely to be.
c.the more socially outgoing the person is likely to be.
d.All of the above are correct.
4) Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes
so that high cigarette prices
a.encourage marijuana use, and the evidence supports this argument.
b.encourage marijuana use, but the evidence does not support this argument.
c.discourage marijuana use, and the evidence supports this argument.
d.discourage marijuana use, but the evidence does not support this argument.
5) Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
In order to maximize profit, the firm will produce a level of output where marginal
revenue is equal to
a.$6.
b.$7.
c.$8.
d.$9.
6) The phenomenon of free riding is most closely associated with which type of good?
a.private goods
b.club goods
c.common resources
d.public goods
7) The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
If the production possibilities frontier shown is for 240 hours of production, then which
of the following combinations of ham and cheese could Bonovia not produce in 240
hours?
a.250 pounds of ham and 120 pounds of cheese
b.200 pounds of ham and 160 pounds of cheese
c.160 pounds of ham and 200 pounds of cheese
d.100 pounds of ham and 240 pounds of cheese
8) Figure 10-11
A benevolent social planner would prefer
a.a $24 price to any other price.
b.420 units to any other quantity of output.
c.a subsidy of $24 per unit to a subsidy of $27 per unit.
d.All of the above are correct.
9) Table 17-7
The information in the table below shows the total demand for internet radio
subscriptions in a small urban market. Assume that each company that provides these
subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal
cost of providing an additional subscription is always $16.
Refer to Table 17-7. Assume there are two profit-maximizing internet radio providers
operating in this market. Further assume that they are able to collude on the quantity of
subscriptions that will be sold and on the price that will be charged for subscriptions. If
the firms divide the market evenly, how much profit will each company earn?
a. $12,000
b. $16,000
c. $44,000
d. $60,000
10) Which of the following is an example of a positive externality?
a.air pollution
b.a person littering in a public park
c.a nice garden in front of your neighbor’s house
d.the pollution of a stream
11) Vertical equity is not consistent with a regressive tax structure.
a.True
b.False
12) In a market, to find the total amount supplied at a particular price, we must
a.sum the quantities that individual firms are willing and able to supply at that price.
b.calculate the average of the quantities that individual firms are willing and able to
supply at that price.
c.sum the costs that individual firms incur to supply the product at that price.
d.account for all determinants of demand.
13) If there are many firms participating in a market, the market is either
a.an oligopoly or monopolistically competitive.
b.perfectly competitive or monopolistically competitive.
c.an oligopoly or perfectly competitive.
d.an oligopoly or a cartel.
14) Table 13-3
The marginal product of the fourth worker is
a.10 units.
b.60 units.
c.230 units.
d.240 units.
15) The results of a 2008 Los Angeles Times poll suggest that a significant majority of
Americans believe that free international trade helps the American economy.
a.True
b.False
16) When externalities are present in a market, the well-being of market participants
a.and market bystanders are both directly affected.
b.and market bystanders are both indirectly affected.
c.is directly affected, and market bystanders are indirectly affected.
d.is indirectly affected, and market bystanders are directly affected.
17) A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At
a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the
midpoint method, the price elasticity of supply for bagels is about
a. 0.62.
b. 0.77.
c. 1.24.
d. 1.63.
18) A natural monopoly arises when
a.there are constant returns to scale over the relevant range of output.
b.there are economies of scale over the relevant range of output.
c.one firm owns a key natural resource.
d.the government gives a single firm the exclusive right to produce a particular good or
service.
19) When calculating the cost of college, which of the following should you probably
not include?
a.The cost of tuition
b.The cost of books required for college classes
c.The income you would have earned had you not gone to college
d.The cost of rent for your off-campus apartment.
20) A decrease in the price of creamer will increase the equilibrium price and decrease
the equilibrium quantity in the market for coffee.
a.True
b.False